California Bar Journal
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Attorney resigns for submitting false claims in chemical mishap

Oakland attorney Jerry W. Varnado [#153451] has resigned as a result of submitting hundreds of false claim forms to the court in a toxic gas release case. Varnado, 54, also was charged by the State Bar with incompetent representation of thousands of clients who claimed damages following the July 1993 release of sulfuric acid from the General Chemical Corp.'s Richmond plant.

He became the second attorney forced out of practice as a result of their conduct following the gas release, which affected some 80,000 mostly poor residents of Contra Costa County.

The State Bar filed charges against Varnado in 1995, alleging that he submitted claims against General Chemical which contained false information and bore false signatures. At least 800 of the claims were duplicates: the claimant's name was the same, but other information, such as addresses, Social Security numbers and the types of injury suffered, was different.

Investigators determined that Varnado himself filled out and signed some of the claims.

He submitted claims in 1995 on behalf of 6,600 individuals.

The bar charged him with six counts of misconduct, including failure to perform legal services competently, misleading the court, and engaging in acts of moral turpitude and dishonesty through disrespect and dishonesty to the court.

Varnado, who had been an attorney for less than two years when the gas release occurred, resigned effective Nov. 2.

At the time of the incident, residents of the affected area were warned by the bar and other consumer protection agencies to beware of cappers and lawyers who were illegally soliciting clients. Thousands of people filed claims against General Chemical, resulting in a coordinated mass toxic tort action in Contra Costa Superior Court.

Because of the number of claimants, the court devised a set of rules including requirements that each individual submit a questionnaire both in hard copy and electronic form.

When parties to the litigation noticed "a significant number of irregularities," the court ordered an investigation. As a result, it dismissed 1,915 plaintiffs, identified as Varnado's clients, from the action.

The judges asked Varnado to provide copies of retainer agreements with a random sample of 236 clients, but he could provide only 87.

A court investigator later documented Varnado's efforts to have claimants sign fee agreements after the judge made the request. In addition, Varnado removed 888 clients from the case eight months earlier because he did not have retainer agreements with them.

Following the investigation, the judge ordered about 2,000 claimants to appear to show cause why their claim should not be dismissed. Approximately 1,200 appeared and reviewed their paperwork.

The court then approved 1,054 claims and dismissed 713.

At his deposition, Varnado blamed the problems with the questionnaires on his staff and claimed he was unaware of their actions. But a handwriting analyst hired by the bar established that Varnado actually filled out and signed some of the questionnaires.

Varnado submitted his resignation when presented with the findings.

A Walnut Creek attorney, Samuel N. Anya-Gafu [148421], 38, was disbarred in April, partly as a result of his misconduct in the General Chemical matter.

He represented more than 200 claimants in the case. The court issued two restraining orders against him after irregularities were found in signatures on claim questionnaires and releases submitted by clients. In addition, Anya-Gafu had negotiated settlement checks without client endorsements.

It was later discovered that one client executed multiple releases submitted for various claimants and that signatures on some releases did not match the signatures on the verification of claim questionnaires.